The Power of Space

By ALBERT B. CRENSHAWBy ALBERT B. CRENSHAWFebruary 2, 1986

TWENTY-FIVE YEARS AGO, when Harold (Hal) Winkler's family company undertook to build five 16-story apartment towers in Virginia, five miles south of the White House, it seemed to many a very doubtful proposition. "This was cow pasture out here," he recalled. Lenders felt "it was the riskiest sort of thing." High-rises were for urban areas -- "Who ever heard of 16-story buildings out here in the farmlands" where Seminary Road crossed Shirley Highway?

Today Southern Towers, 2,500 apartments in all, is fully occupied, as it has been since it opened, and Winkler is completing another tower across the street. But the new project is a hotel, not an apartment building; and it stands in the middle of an office park that Winkler developed, not in the middle of farmland.

Winkler's story is the story of the Washington suburbs. From Crystal City to Bethesda, from Manassas to Gaithersburg, the past 25 years have brought a transformation so rapid and so vast that even people who have lived through it have trouble adjusting their minds to it.

What was an obscure rural outback has, in one generation, become a major player in the region's economy. In 1960, the Washing- ton area had just under 23 million square feet of privately owned rental office space, almost 90 percent of it in the District of Columbia, according to figures compiled by the real estate consulting firm of Colliers Leggat McCall. Today the total is 170 million square feet, and barely a third of it is in the District.

In another 25 years, the area total is expected to almost double -- to some 300 million square feet -- and the District "will be lucky" if it can claim a quarter of that, said Lewis Bolan, managing director of Colliers Leggat McCall here.

Montgomery County has gone from roughly 1 million square feet in 1960 to 28 million today. Over the same time span, Fairfax has leaped from 500,000 square feet to 39 million. By 2010, Montgomery will exceed 40 million and Fairfax will top 60 million, according to the forecast. To put that in perspective, 500,000 square feet -- Fairfax' entire 1960 total -- would equal one good-sized building by today's standards.

The psychological change has also been profound. The District is no longer central to the lives of many business people and area residents. Ask suburban developers about the future of the District, and they'll say without reservation that it has one. But press for a description of it, and they'll begin to talk about the Kennedy Center, the Mall, the museums: downtown will sound more like a tourist attraction than a business center.

The view that the District is history and the suburbs are the future is not uiversally shared. Some developers and District government officials have ambitious hopes and plans to rejuvenate downtown as a retail center and to expand its office market. And there are indications that some of these projects are gathering momentum. But to succeed, either the city must depend on an expansion of traditional downtown tenants, or businesses that prefer the suburbs need to be persuaded that they would be happy in the city.

Today among office users, "there is a marked difference in who locates where," Bolan said. There are city types and suburban types. "I have never seen a prospective tenant come to us and say, 'Well, we might be interested in a downtown location or in a suburban location.' They will almost invariably say they want to be in one or the other."

City tenants are often referred to as the "three A's" -- attorneys, accountants and associations. "Stretching the alliteration a little bit, the suburbs really are domiated by corporations, communications and computers," said Bolan. And while the three C's are all rapidly growing, the three A's are not. Law firms are turning to the suburbs, opening branches in such places as Bethesda or Tysons Corner.

"The growth that we see is much more in communications and corporate activity than in the more traditional users of downtown space," Bolan said.

THE EXPLOSION of the suburban economy is something no one planned and few foresaw. From the end of World War II through the early 1960s, Washington's suburbs (like those of most American cities) were places of escape from the city -- places to live, to raise children, but not to work. The GI Bill made housing affordable, the car made the suburbs accessible and builders were eager to meet the demand.

Clarence Dodge Jr. of Weaver Bros. recalls subdivisions in the 1950s where a veteran with a GI loan needed only $100 in cash to get into a new house.

By 1959, when Dodge became president of the Washington Real Estate Board, as it was then called, high-rise apartment construction in the suburbs was still novel, and the term "high-rise" was applied to seven-story buildings. Builders in the city were complaining that the 1958 revisions of the District's zoning code made high-rise apartment development in the District too expensive; industry leaders worried that construction would move to the suburbs.

At that time, office buildings were not categorized by where they were, but by the extent of their air conditioning -- none, partial or complete. They were in the city unless otherwise specified. Tenants consisted of a)the government and b)everybody else. Most commercial space in the suburbs, except for a few small office concentrations in areas such as Silver Spring, was in warehouses.

It was also a time of growing racial tension in the city, as the dual school system and other forms of segregation were dismantled. Whites were moving out in droves (mostly denying that race had anything to do with it), taking with them the earning power and educational levels that, a decade later, would make the suburbs appealing to retailers and private employers.

Small shopping centers and professional services came right behind. But it was a change in the transportation system that triggered the explosive commercial growth of the past few years.

Through the 1940s and 1950s, transportation in the suburbs focused on getting people back and forth from downtown. Movement across the suburbs was difficult and time-consuming.

Then, in 1964, the Capital Beltway was completed. Not only did it tie the suburbs together, but where it crossed other major roads, it created new locations where development could focus. For the first time, there were sites away from downtown that had the potential to achieve what builders call critical mass -- the point at which an area has so much development that it generates more on its own.

What this would ultimately mean to the area was not immediately evident, even to professional planners. Just two years earlier, Montgomery County had adopted a master plan based on a system of wedges and corridors -- corridors of intense development along Interstate 270 and Route 29 (which lead out from the District to the northwest and northeast, respectively) separated by wedges of green space.

That plan was quickly overtaken by events. In Montgomery, particularly, where residential development was already extensive and where the Beltway runs closest to the District, more housing was built. "Only Minutes From the Beltway" became a slogan that endures to this day.

The impact on shopping was even more spectacular. The Beltway made the mega- mall economical. A Tysons Corner or a White Flint makes sense only if large numbers of shoppers can get to it. Before the Beltway, only downtown had the kind of transportation access to appeal to large numbers of shoppers.

The movement of jobs was much slower, however. In the 1960s, the private economy was still only a pimple on the side of the government, the government was still mostly downtown, and developers were reluctant to get too far away. But with land and other costs well below those of the city, the suburbs held powerful appeal to builders. Slowly they began to devise ways to bring the government to them.

ONE OF THE most successful was the Charles E. Smith Cos., developers of Crystal City in Arlington. When work now under construction is completed in two or three years, Crystal City will consist of more than 20 million square feet of office, residential and retail space. The Crystal Underground, 150,000 square feet connected directly to a Metro stop, contains 75 shops, six full-scale restaurants and a food plaza with an additional 15 eating places. It is alive by day and by night. Above are apartments, condominiums, hotels and both government and private offices.

Robert H. Smith, son of Charles E. Smith, recalled recently the evolution of Crystal City, beginning in the early 1960s:

The Smiths had been building office buildings and apartments in the District, had done some apartments in Arlington in the late 1950s, and were looking for opportunities to expand.

"I got a call from a friend of mine, who was a dentist with a real estate license; and he said, 'I have a piece of ground I'd like to show you. It's not too far from downtown Washington,' Robert Smith recalled.

"So we drove out here one Saturday morning, and he showed me 18 acres of land on South Eads Street" that had been used for low-cost government housing during the war. The buildings had been deolished, and the property's owner, the Washington Brick and Terra Cotta Co., was anxious to develop it, the dentist said. The company wouldn't sell, he added, but they would lease.

"So I looked around," Smith related. "It was not the most attractive area . . . drive-in movie theaters, warehouses, bowling alleys . . . but I was intrigued by the proximity to the 14th Street Bridge and to that -- " he said, pointing out his Crystal City office window to the plainly visible federal buildings of downtown.

"I said, well, there's 18 acres of land, and that's a pretty good piece of land. Perhaps we can create our own environment, so when people drive by, the contrast with what we have created might be enough of a lure to bring them out here.

"So we made a deal with the brick company . . . a very favorable lease for 99 years," and got the land rezoned for 828 high-rise apartments in two buildings.

The Crystal House apartments opened in 1962, offering one-bedroom units renting for $145, including utilities. "And it worked," Smith said. "That proved to us that we could overcome the physical deterrents if we gave real value and if we created something attractive as well.

"Now, at the time, none of us dreamed that these two buildings would be the entree to a 42-building complex. This was not a grand dream . . . It didn't happen like that. It evolved through a variety of circumstances."

One of those circumstances was that the brick company had another 18 acres across the street. "After looking at that, we felt that we just didn't want to build apartments anymore, but that in this location, there could very well be a demand for a mixed-use project that would include office, service retail and residential."

But when the company broke ground for the first office building in 1964, it proved "very lonely out here . . . very lonely. So we said, if we want to have office tenants out here, we'd better have some kind of incentive," Smith said.

The federal government at the time used a sealed-bid process in leasing office space. So the Smiths determined to make the government an offer it couldn't refuse. "We decided to bid . . . such an attractive price that they could not dare not accept . . . $4.09 a square foot, including all utilities, with no escalation for 10 years."

It worked. The Smiths won "because nobody else was willing to give away a building for 10 years. That then gave us the courage to start the second office building, following the same produre; but instead of getting $4.09 a foot, we were able to get 10 cents more," Smith said.

Those two successes paved the way for the real coup -- landing the U.S. Patent Office. The Patent Office at- tracted patent lawyers who wanted to be close by, and that in turn led to more office buildings. The Smiths were able to get additional land; and more offices, hotels, etail space and condominiums followed.

The same sequence -- housing, then retail, then offices -- was being played out at differing speeds in Rosslyn, at the other end of Arlington, in Alexandria, in Bethesda and in other locations close to the District. At the same time, traditional subdivisions continued to grow in between. By 1970, growth in many jurisdictions was outrunning services.

Traffic congestion began to emerge as a major complaint, along with rapidly rising taxes. When Prince George's County commissioned the well-known (and now late) planner and urban designer Constantinos Doxiadis to examine its growth patterns, he concluded that costs of schools and other services were such that only high-rise construction paid for itself. Everything else, including single-family houses, consumed more in services than it produced in tax revenue.

Attitudes changed.

Pro-growth and no-growth forces seesawed in the politics of some suburban counties. Residential and commercial builders, facing political uncertainty and inflation-fueled cost increases, cut back.

By the late '70s, growth- oriented leadership was emerging in both city and suburbs, while at the same time developers realized that office vacancy rates had sunk almost to zero. The result was a construction boom that is still under way.

TODAY the Washington suburbs are benefiting from an unprecedented combination of favorable factors:

*The emergence of Washington as an international cultural and social center, which has enhanced the area's appeal as a place to live and work.

*The buildup in Defense Department spending, especially the interest in high- tech weapons. *The changes in the tax code and in financial services, which have made it easy for builders to get the money they need.

The result has been an explosion of commercial construction and leasing. A survey last year by Smithy Braedon, a Washington-based brokerage and real estate company, found that during the 12 months ending last summer, 11.9 million square feet were leased here. That, according to the Office Network, Inc., a national group of brokerages in which Smithy Braedon participates, was the highest among the nation's 24 largest markets.

At the same time, Coldwell Banker Real Estate Services, Inc., put the vacancy rate in the suburbs at 15.3 percent, well above downtown's 10.3 percent. And leasing agents and developers alike say that much of the leasing activity has reflected tenants who take advantage of a soft market to move into better quarters or to get a better deal on rent or amenities.

But there is no question that in the suburbs, at least, there is strong economic growth to go with the new buildings. A recent study by the District Department of Employment Services found that between 1979 and 1984 private employment in Northern Virginia grew 34.5 percent and government employment grew 12.5 percent. Private employment in Maryland also climbed strongly, 22.7 percent, but government jobs there and in the District also shrank by more than 9 percent. Private employment in the city rose 7.7 percent, the study found.

Virginia's advantage is expected to continue. Because Virginia, particularly Fairfax, was less developed before the construction of the Beltway, the new roads, such as Interstate 66, cut through open land. When commercial developers looked at the shiny new intersections in Virginia, they found many of them surrounded by farms, not subdivisions. In addition, a growing share of the residential development there was being done as planned com- munities, which were meant to include office buildings and stores.

The planned community of Reston includes 1,100 acres in a business park -- land that, after sitting largely idle for nearly 20 years, is now some of the hottest-selling property in the metropolitan area.

What has happened in Reston is a good example of the explosive growth of Fairfax's commercial sector. In 1976, the sum total of commercial space delivered in Reston was a single 3,400- square-foot doctor's office. Next year, 1.5 million square feet will come to Reston, according to William Lottier, commercial marketing representative for the Reston Land Corp. Indeed, in every year but one since 1982, a million square feet or more have been delivered there.

Virginia has also gained much from the military buildup. The Pentagon's position on the south side of the Potomac makes Virginia an ideal place for current and would-be defense contractors to locate.

In addition, high-tech firms, which face stiff competition for qualified employes, are eager to locate in carefully tailored office parks that can provide the kind of away- from-it-all environment that engineers seem to prefer. which can run to hundreds of acres, feature enormous parking lots, and may also have amenities such as lakes, jogging paths and fitness centers.

In contrast to the no- growth attitudes of the '70s, local jurisdictions are now actively competing for new development. Montgomery County has written into its zoning code a new mixed-use planned-development category, designed to encourage the development of large tracts of land into mixtures of housing, offices and stores.

Late last year, the county approved a a $500 million development on 211 acres south of Gaithersburg, despite fears of Gaithersburg and Rockville officials that the nearby roads will be overwhelmed.

In general, development will tend to be in high-density clumps of the sort now seen at Tysons Corner. "By the end of the century, Fair Oaks will look like Tysons Corners looks today," said Lewis Bolan.

"If you look at the areas that either have emerged or are emerging right now, every one of them has either major highways, Metro, or both."

But getting around in these clumps or between them is already getting difficult and promises to get much harder.

Montgomery County has attempted through zoning and its Adequate Public Facilities Ordinance to limit construction to what the roads and other services can support. In Bethesda two years ago, it held an extraordinary "beauty contest" in which builders competed for development rights by offering impressive designs and public amenities.

Still, Montgomery residents are as vociferous as their Fairfax counterparts in complaining about traffic problems. Developers insist that problems in both areas can be solved by road construction -- though many transportation planners doubt it.

Many experts foresee a general evening-out of development -- more in the suburbs, little increase in the city. Bolan agrees. "I would project that by the end of the century, if you were to fly over the metropolitan area, you would see very little distinction: you certainly couldn't tell where the District ended and where all of the closer-in suburbs began," he said.